Orion S.A. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the third quarter of 2026 were $473 million, a 5% increase year-over-year from $450.9 million in the prior year period.
• Consolidated net loss was $3 million, compared to a net loss of $67.1 million in the third quarter of 2025.
• Adjusted EBITDA was $67 million for the quarter, up from $57.7 million in the prior year quarter; year-to-date Adjusted EBITDA reached $171 million.
• Third quarter Adjusted EBITDA included an approximate $17 million net benefit related to the timing of European emission allowances.
• Operating cash flow was $58 million, and free cash flow was $46 million for the quarter.
• Net debt was $918 million, resulting in a net debt-to-trailing twelve-month Adjusted EBITDA ratio of 4.1x.
• Quarter-end liquidity was $193 million.
• Year-to-date Net sales were $1,433.2 million compared to $1,395.0 million in the same period of 2025.

Guidance and Future Outlook:

• Orion tightened its 2026 Adjusted EBITDA guidance range to $190 million to $200 million, raising the midpoint.
• The company expects to generate positive free cash flow for the full year 2026 despite higher feedstock costs.
• Management anticipates delivering improved Adjusted EBITDA in 2027, coupled with an approximate $20 million capital expenditure reduction, to drive positive free cash flow in 2027.
• The company expects to reduce full-year capital expenditures by $70 million.
• Management noted that global oil prices have not moderated as anticipated, but the formulaic pass-through mechanisms continue to mitigate feedstock volatility.

Business Segments and Product Lines:

• Specialty Carbon Black: Net sales increased 4% year-over-year to $166.4 million, driven by a 6% favorable pass-through effect from higher oil prices and a 5% benefit from improved product and regional mix, partially offset by a 7% unfavorable volume effect. Adjusted EBITDA increased 18% to $25.4 million.
• Rubber Carbon Black: Net sales increased 5% year-over-year to $306.4 million, driven by a 16% favorable pass-through effect from higher oil prices, partially offset by 4% lower volumes, 4% lower pricing due to annual contract agreements, and 3% unfavorable customer mix. Adjusted EBITDA increased 15% to $41.4 million.
• Both segments benefited from the timing of European emission allowances and favorable pass-through effects from higher raw material costs.

Market and Competitive Landscape:

• Trends in Western regions moderated during the third quarter, particularly within the polymers end market where customers exhibited destocking behavior.
• Volume declines in the Specialty Carbon Black segment were concentrated in EMEA and Americas regions where destocking activity was more pronounced.
• Rubber segment volume declines occurred in the Americas and Asia Pacific regions.
• Moderating tire imports have not yet led to a tangible recovery in local tire manufacturing in key North American and European regions.

Risks and Challenges:

• The company faces challenges from higher average feedstock costs and volatility in oil prices.
• Destocking behavior by customers in the polymers end market has negatively impacted volumes.
• Lower pricing in the Rubber Carbon Black segment was associated with 2026 annual contract agreements.
• The company is evaluating its overall production network with a focus on underperforming assets.

Management Commentary and Tone:

• CEO Corning Painter stated that third-quarter results were "particularly encouraging" given the macro backdrop and feedstock cost volatility, highlighting the organization's tenacity and commitment to execution.
• CFO Jon Puckett emphasized that positive cash flow generation for debt reduction is the highest financial priority and expressed confidence in generating free cash flow in 2026.
• Management noted that the company is on track to exceed full-year gross cost savings expectations.
• The tone reflected confidence in the business's inherent resilience and the effectiveness of working capital initiatives despite industry trough-like conditions.

Other Key Points:

• The company maintained a robust working capital performance, which drove $28 million of cash generation in the quarter.
• Capital expenditures were $12 million in the third quarter, representing a $14 million sequential reduction.
• The company reported continued strong year-to-date global safety performance with no lost time accidents.
• Fixed cost performance was strong, with the company on track to exceed full-year gross cost savings expectations.
• The company has innovation centers on three continents and 14 plants worldwide.